Drop in overseas business school students ‘could cost UK £4.6bn’

The UK could lose out on £4.6 billion if there is a large dip in the number of international students attending business schools, analysis has found.

The Economic Impact of International Business School Students in the UK report, by London Economics for the Chartered Association of Business Schools (Cabs), assesses the cost of falling international student numbers amid an increasingly challenging policy environment.

It estimates that each international business and management student contributes on average about £103,000 to the UK economy.

International student enrolments at business schools have fallen 18 per cent since their 2022-23 peak, and the report estimates that, had enrolments remained at peak levels, the 2024-25 cohort alone would have contributed an extra £2.1 billion to the UK economy.

The report then models three scenarios to estimate the economic impact of any further declines, with all three showing significant financial impact.

In the least bad scenario, where international student recruitment fell 11 per cent between 2024-25 and 2029-30, Cabs predicted that there would be a net economic impact of £1.7 billion. It said this was equivalent to 12,100 fewer jobs, roughly the same number of people employed by London Stansted Airport. The loss in direct fee income to HE providers was estimated to be £500 million.

In the second scenario, under a “medium decline” (15 per cent) in international student numbers, Cabs estimated that there would be a net economic impact of £2.2 billion, equivalent to 15,700 fewer jobs, and a £600 million loss in direct fee income. 

Finally, in the final scenario where the UK saw a “large” decline in which student numbers fell back to their 2019-20 level – a 30 per cent decrease – the net economic impact would be £4.6 billion, equivalent to 32,300 fewer jobs; “nearly the size of Greggs’ entire UK workforce”, the paper says. Tuition fee income would fall £1.3 billion, or 12 per cent of all direct fee income from international students across the sector. 

“Restricting international student numbers will harm business schools and universities but the consequences will also be felt across the UK, particularly in local economies that host large international student populations,” the report says.

“The decline in international student numbers has also intensified the sector’s financial sustainability crisis, with many warning that some institutions face a serious risk of ceasing operations. These warnings should not be dismissed as hyperbole or exaggeration.”

The report follows Cabs’ annual survey, which presented a gloomy outlook for the business school sector. It said international student recruitment had “deteriorated” since last year, with the coming international student levy and changes to the graduate route likely to make things worse.

Michael Mainelli, chair of the Cabs international students task force, said that despite the clear value international students bring to the UK, recent declines “have already cost the country billions”.

“As our competitors turn inwards, the UK can choose a different path. If we enable our universities and business schools to recruit the top international students our competitors are turning away, we have a real chance of delivering good growth in every postcode.

“There is a golden opportunity to get this right. Recruiting the best and brightest is not simply a tagline. It signals to the rest of the world that we are global leaders in higher education.”

Cabs chair Stewart Robinson said that the analysis painted “an alarming picture of the economic damage caused by declining international student enrolments”, and it should be a “wake-up call” for the government.

He added that such declines are “contributing to very serious concerns that universities are at risk of closure due to the ongoing financial challenges they’re facing”.

“It is imperative that the government works with the sector to prevent further damage to the sector and economic growth. While the government is on a mission to achieve good growth in every postcode, it will not be able to achieve this if university towns and regions continue to face a decline in international business school students.”

juliette.rowsell@timeshighereducation.com